Late payments have recently been in the spotlight, with the Government announcing new measures to deal with the problem. Escalate has been focusing on this issue for a while now, as well as the resulting bad debt and commercial disputes that can follow.
Government unveils plans to tackle late payment
Policies need a practical mechanism for recovering funds. The Department for Business, Energy and Industrial Strategy (BEIS) has announced new measures to tackle late payments.
Key initiatives include:
A consultation on strengthening the powers of the Small Business Commissioner, Paul Uppal, will be launched. This will consider imposing fines and binding payment plans in order to improve poor payment practices.
Company boards will be held accountable for supply chain payment practices for the first time.
A tough new approach will be applied to large companies that do not comply with the Payment Practices Reporting Duty, an existing mandatory requirement on businesses to report payment practice to a national database twice a year.
A new Business Basics fund will be launched to encourage businesses to use technology to simplify invoicing, payment and credit management.
Responsibility of the voluntary code of best practice, the Prompt Payment Code, will be moved to the Small Business Commissioner.
In our view, successfully tackling late payment requires a cultural shift by large businesses, and the Department for Business, Energy and Industrial Strategy’s proposals have the potential to make a difference in this area. Strengthening the scope and power of the Small Business Commissioner and making company boards more accountable for the payment of suppliers will start to change attitudes at leadership level, and that will begin to drive better behaviour over time. Although the announcement includes some sensible measures to target businesses that refuse to pay on time, they’re unlikely to be enough by themselves.
Ensuring that SMEs have quicker and more cost-effective access to the legal system will be vital if the proposals are to have real bite, and accountants and lawyers have an important role to play there. Although the tide is starting to turn, we firmly believe that the current system is broken and stacked against SMEs.
We will continue to support businesses to recover the money they are owed through bad debts and other commercial disputes.
For more information on how Escalate dispute resolution service can help your business recover unpaid funds, please get in touch with one of our dispute resolutions specialists on help@armstrongwatson.co.uk or call 0808 144 5575.
